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CIRCULAR

Guiding the implementation of the Prime Minister's Decision no. 238/2005/QD-TTG of september 29, 2005, on foreign parties' stock-holding rates in Vietnam's Securities Market

Pursuant to the Government Decree No. 77/2003/ND-CP of July 1, 2003, defining the functions, tasks, powers and organizational structure of the Ministry of Finance;

Pursuant to the Prime Minister's Decision No. 238/2005/QD-TTg of September 29, 2005, on foreign parties' stock-holding rates in Vietnam's securities market,

The Finance Ministry hereby guides the implementation of the Prime Minister's Decision No. 238/2005/QD-TTg of September 29, 2005, as follows:

I. GENERAL PROVISIONS

1. Subjects of application

- Foreign organizations and individuals that use their ownership capital sources to purchase and/or sell stocks listed or registered for transaction at securities trading centers, including the entrustment via securities companies or fund-managing companies.

- Foreign securities trading organizations that use their ownership capital sources to contribute capital to, purchase shares from, or contribute joint-venture capital for establishment of, securities companies or securities investment fund-managing companies.

2. Interpretation of terms

In this Circular, the terms bellows shall be construed as follows:

2.1. Foreign organizations and individuals mean:

a/ Organizations set up under foreign laws;

b/ Foreign organizations in joint-venture enterprises or enterprises with 100% foreign capital set up in Vietnam;

c/ Foreign investment funds;

d/ Foreigners;

e/ Overseas Vietnamese.

2.2. Stocks listed or registered for transaction mean the issued stocks of an organization, which are listed or registered for transaction at securities trading centers.

2.3. Investment fund certificates listed or registered for transaction mean certificates of securities investment funds, issued and listed or registered for transaction at securities trading centers.

2.4. Circulated bonds mean bonds of an organization, which have been issued and listed or registered for transaction at securities trading centers.

2.5. Joint-venture securities companies mean securities companies established on the basis of joint-venture contracts between foreign securities trading organizations and their Vietnamese partners according to establishment and operation permits granted by the State Securities Commission.

2.6. Joint-venture fund-managing companies mean fund-managing companies set up on the basis of joint-venture contracts between foreign securities trading organizations and their Vietnamese partners according to establishment and operation permits granted by the State Securities Commission.

II. SPECIFIC PROVISIONS

1. Rates of holding stocks or investment fund certificates

1.1. Foreign organizations or individuals that purchase and/or sell stocks or investment fund certificates at securities trading centers may hold at most 49% of the total number of stocks or investment fund certificates of a listing or transaction-registering organization or of a securities investment fund.

1.2. Where listing or transaction-registering organizations are foreign-invested enterprises transformed into joint-stock companies under the Government Decree No. 38/2003/ND-CP of April 15, 2003, on transformation of a number of foreign-invested enterprises into joint-stock companies, the total number of stocks listed or registered for transaction shall be the number of stocks issued to the public by the enterprises under plans approved by competent authorities.

1.3. Where foreign organizations or individuals have held more than 49% of the total number of stocks issued to the public before the stocks are listed or registered for transaction, they must sell their stocks to ensure the maximum stock-holding rate of 49%.

2. Bond-holding rate

2.1. Foreign organizations or individuals that purchase and/or sell circulated bonds of a listing or transaction-registering organization at a securities trading center may hold bonds at unlimited percentage.

2.2. Where foreign investors hold convertible bonds of an issuing organization, after converting bonds into stocks, the issuing organization must ensure that the foreign investors’ stock-holding rate must not exceed 49% of the total number of their stocks listed or registered for transaction.

3. Rate of capital contribution by foreign securities trading organizations

3.1. Foreign securities trading organizations may contribute capital to, or purchase shares from, Vietnamese securities companies or Vietnamese fund-managing companies at a maximum rate of 49% of the charter capital.

3.2. Foreign securities trading organizations may contribute capital with Vietnamese partners for the establishment of joint-venture securities companies or joint-venture fund-managing companies at a maximum rate of 49% of the charter capital. Joint-venture capital contributors shall have to fully contribute their capital portions under the charters of joint-venture companies and the provisions of law.

3.3. The change of the rate of capital contribution or share purchase, or the transfer of contributed capital or share capital by foreign securities trading organizations shall be decided by managing boards of securities companies or fund-managing companies according to the provisions of Vietnamese law, and must be reported to the State Securities Commission.

4. Supervision and reporting regime

4.1. Foreign organizations or individuals that purchase and/or sell stocks at securities trading centers must register securities transaction codes with the securities trading centers through custody members under the Finance Ministry's regulations, including the case of investment entrustment through securities companies or fund-managing companies. The transfer of foreign currencies into and out of Vietnam by foreign organizations or individuals shall comply with the Vietnamese law's provisions on foreign exchange management.

4.2. The Stock Exchange and the Securities Custody Center shall directly supervise the rate of holding stocks or investment fund certificates by foreign organizations or individuals that purchase and/or sell stocks at securities trading centers. Monthly and in case of necessity, at the request of the State Securities Commission, the Stock Exchange and the Securities Custody Center shall report to the State Securities Commission on the situation of foreign organizations' or individuals' holding stocks or investment fund certificates listed or registered for transaction, made according to set forms.

4.3. The State Securities Commission shall have to supervise foreign securities trading organizations' observance of regulations on the rate of capital contribution to, or share purchase from securities companies or fund-managing companies, and capital contribution for establishment of joint-venture securities companies or joint-venture fund-managing companies.

4.4. Annually and in case of necessity, at the request of the Finance Ministry, the State Securities Commission shall report to the Finance Ministry on capital contribution, share purchase or joint-venture capital contribution by foreign securities trading organizations, made according to a set form.

III. IMPLEMENTATION PROVISIONS

This Circular takes effect 15 days after its publication in "CONG BAO" and replaces the Finance Ministry's Circular No. 121/2003/TT-BTC of December 12, 2003, guiding foreign parties' stock-holding rate in Vietnam's securities market.

Any difficulties or problems arising in the course of implementation should be reported to the Finance Ministry for consideration and settlement.